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HKTDC Export Index 1Q15: Exporter Sentiment Improves While Prospects in the Major Markets Look to be Stabilising

The HKTDC Export Index is designed to monitor the current export performance of Hong Kong traders and gauge their near-term prospects.

11 March 2015

In 1Q15, the Hong Kong exporters’ confidence improved over the previous quarter, with the HKTDC Export Index rebounding to 44.9 from 38.2 in 4Q14.

Except for jewellery, all major industries reported higher readings for 1Q15, though were still below the watershed of 50. Machinery and electronics exporters are the least pessimistic.

Export sentiment improved across all major markets for 1Q15, with a basically neutral view toward Japan, the US and the Chinese mainland, but slightly negative towards the EU.

Both the Trade Value Index and the Procurement Index dropped further below 50, signalling lower unit prices and less procurement activities in the near term.

With regard to labour cost pressures, 64% of respondents reported higher labour costs on the mainland during 1Q15, up from 57% in 4Q14.

The HKTDC Export Index rebounded to 44.9 in the first quarter of 2015 (1Q15), from 38.2 in 4Q14. Overall, exporters were less pessimistic about their likely export performance over the short-term.

Except for jewellery, all major industries reported higher readings for 1Q15, though still below the watershed of 50. With the highest reading of 49.1, machinery exporters are the least pessimistic among these major industries. This is followed by electronics, which reported a score of 45.6. Other industries, however, had their indices at around 40.

Export sentiment improved across all the major markets. The indices for Japan, the US and the Chinese mainland rose to about 50, reflecting an essentially balanced view. Exporters, however, remained slightly negative towards the EU, with a reading of 46.7 for 1Q15.

The Offshore Trade Index dropped to 38 in 1Q15, down from 42.1 in 4Q14. Exporters were more negative with regard to their offshore trade performance (i.e. those shipments not passing through Hong Kong, but handled by Hong Kong exporters), as compared with their overall export performance.

The Trade Value Index edged down to 48.3 in 1Q15, from 48.7 in 4Q14. Except for toys and timepieces, all major industries saw readings below 50, although the clothing and jewellery sectors reported higher readings for 1Q15. By contrast, with readings above 50, toys and timepiece exporters have an expectation of higher unit prices in the near term.

The Procurement Index slid for the third consecutive quarter, falling to 39.3 in 1Q15 (down from 46.7 in 4Q14). A reading below the watershed of 50 may signal that procurement activities are likely to shrink in the near term. Among the major industries, jewellery exporters (36.3) had the weakest procurement sentiment, while toy exporters (45.1) were the least pessimistic.

The Employment Index fell to 42.9 in 1Q15, from 47.1 in 4Q14. Among the major industries, jewellery, timepieces and machinery saw higher readings when compared to the previous quarter. In particular, the indices for jewellery and machinery increased to 50. Hiring confidence, however, is at its lowest in the clothing sector, which reported a reading of 39.2.